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HSA Basics

Internal Revenue Code (IRC) Section 223 allows individuals who are covered by a compatible health plan, often referred to as a High Deductible Health Plan (HDHP), to set aside funds on a tax-free basis up to the contribution limit to pay for certain out-of-pocket medical expenses. Health Savings Accounts have a triple tax benefit—funds go into the account tax-free, funds grow tax-free and remain completely tax-free when used for eligible medical expenses. Here are some HSA basics to get you started with your HSA.

HSA Employee Education Guide

Here are some other unique aspects of HSAs as defined in IRC Section 223:

  • They are owned by you, the participant.
  • They can be funded by you, your employer or even a third party.
  • HSAs carry over from year to year and are portable if employment changes.
  • The IRS sets the annual contribution limits and limits the types of health plans that qualify for an HSA.
  • HSA funds can continue to be used for eligible medical expenses, even if you become ineligible to contribute in the future.

Contribution Limits

Contributions can be made by you, your employer or a third party (e.g. family member or friend). Contributions can either be made on a tax-free basis through a Section 125 Plan or directly into the account on a tax-deductible basis. The IRS sets the maximum annual contribution limit. Generally, HSA contributions do not have to be prorated; however, certain exceptions and conditions apply. Contributions can be made at any time up until the tax filing deadline, typically April 15.

IRS Contribution Limits Single Coverage Family Coverage
Contribution Limit (2021) $ 3,600 $ 7,200
Contribution Limit (2020) $ 3,550 $ 7,100
Contribution Limit (2019) $ 3,500 $ 7,000
Additional Catch-up Contribution
(for those 55 and older)
$ 1,000 $ 1,000

Basic Requirements to Contribute to an HSA

To be eligible to contribute to an HSA, you must meet a few basic requirements.

1. You must be covered by a compatible health plan. The IRS defines the minimum deductible, maximum out-of-pocket and eligible coverage requirements of an HSA-compatible plan. Your employer benefits representative should be able to indicate if a specific plan(s) qualifies.

IRS HDHP Limits Single Coverage Family Coverage
HDHP Minimum deductible (2021) $ 1,400 $ 2,800
HDHP Maximum out-of-pocket (2021) $ 7,000 $ 14,000
HDHP Minimum deductible (2020) $ 1,400 $ 2,800
HDHP Maximum out-of-pocket (2020) $ 6,900 $ 13,800
HDHP Minimum deductible (2019) $ 1,350 $ 2,700
HDHP Maximum out-of-pocket (2019) $ 6,750 $ 13,500

 

2. You cannot be covered by any non-qualified health plan as it constitutes ineligible coverage. Examples of ineligible coverage include:

  • Enrollment in a General Medical Flexible Spending Account (FSA) or Health Reimbursement Account (HRA).
  • Coverage under a spouse’s Medical FSA or HRA.
  • Coverage under a spouse’s health plan that is not an HSA-compatible health plan.
  • Enrollment in a prescription plan which provides benefits before the health plan deductible is satisfied. Note: Programs which provide discounts (but not insurance) on prescriptions are acceptable.

3. You cannot be enrolled in Medicare.

4. You cannot be claimed as a dependent on another person’s tax return.

 

  • Commuter Benefits Plan (CBP)
  • Flexible Spending Account
  • Health Savings Account (HSA)
    • HSA Basics
    • Using Your HSA
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Testimonials

​​"We moved our FSA accounts to BRI, added Commuter​ ​Benefits and just recently went to them for COBRA and​ ​could not be happier. -- Our account representative has​ ​made it her personal commitment to us that we trust​ ​that she will deliver what we need. She partners with us,​ ​guides us and takes care of our associates like they were​ ​her own. The support is rock-star quality service!"

​​
National Retailer
(Headquartered in Chicago)
FSA/CBP/MRA/COBRA
With BRI since 2008


​​
"16 years ago I received a call from BRI and liked what they​ ​had to offer! The rest, so they say, is history! They have a great product(s). We started with Commuter Benefits​ ​and have since moved our FSA and COBRA to them. We love BRI!"

National Financial Services Firm
(based in NYC)
FSA/CBP/COBRA
With BRI since 2002


"Excellent customer service from our Senior Account Executive, as well as support from the Client Operations team."

Private Equity Firm
(Headquartered in NYC)
FSA/CBP

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Service Culture
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BRI is routinely rated 95% or higher in all service aspects including; professionalism, friendliness and responsiveness.

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Simplifying the complexity of benefits for maximum savings and peace of mind.

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Rochester NY 14623-4277

email: info@benefitresource.com

phone: (866) 996-5200

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The Beniversal and eTRAC Prepaid Mastercards are issued by The Bancorp Bank pursuant to license by Mastercard International Incorporated. Mastercard is a registered
trademark, and the circles design is a trademark of, Mastercard International Incorporated. The Beniversal and eTRAC cards are accepted at qualified merchants accepting Debit
Mastercard. The Bancorp Bank; Member FDIC.

HSA Custodial Services are provided by a separate financial institution. See your HSA Account Agreement for specific account terms.

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